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First isolate source of instability by setting

pid:
  p: 0
  i: 0
  d: 0
  i_clamp: 0

and

<dynamics damping="0.0" friction="0.0"/>

and

<physics type="ode">
  <gravity xyz="0 0 -9.8"/>
  <ode>
    <solver type="quick" dt="0.0001" iters="1000" sor="1.3"/>
    <constraints cfm="0.0" erp="0.1" contact_max_correcting_vel="10.0" contact_surface_layer="0.001"/>
  </ode>
</physics>

Then, change back the parameters one by one, and see which one(s) are the culprit of your instability.